Question

Hornsby has a single production department, and uses a process-costing system. The balance in its Work-in-Process account on January 1 was $68,000. The account was charged with direct materials, direct labor, and manufacturing overhead of $450,000 throughout the year. If a review of the accounting records determined that $86,000 of goods were still in production at year-end, Hornsby should make a journal entry on December 31 that includes: 1. a debit to Work-in-Process Inventory for $432,000. 2. a debit to Finished -Goods Inventory for $432,000. 3. a credit to Work-in-Process Inventory for $86,000. 4. a debit to Cost of Goods Sold for $432,000. 5. a debit to Finished-Goods Inventory for $86,000.

Answer 1

Answer:

2. a debit to Finished -Goods Inventory for $432,000.

Finished good will be debited to  represent the amount of production during the period. This will later become cost of goods sold when sales occurs.

Explanation:

beginning WIP   68,000

added cost      450,000

ending WIP       (86,000)

Cost of goods manufactured (finished goods) 432,000